President Biden’s American Families Plan proposes to nearly double the long-term capital gains tax for the wealthiest taxpayers, from 20% to 39.6%. Add the 3.8% net investment income tax that certain high-earning investors must pay, and the top capital gains rate would rise to 43.4%. The plan is merely a proposal, of course; the final rate may land closer to 24% to 28%, say some experts.
Smart investors won’t make major portfolio changes right away. “I would not react to proposals,” says Joel Dickson, Vanguard’s head of Enterprise Advice Methodology. “Trying to predict what new taxes will look like is a fool’s errand,” he says. What’s more, the American Families Plan proposal would only affect taxpayers with annual income of $1 million or more, impacting “a small group of investors in a very small way,” says Dickson—and only in their taxable accounts, where capital gains taxes apply.
Nevertheless, a tweak to your portfolio here and there could boost your after-tax returns, no matter how much money you earn. And what you save in taxes can grow and compound longer. “Tax management matters a lot,” says Bradley Clark, a certified financial planner in Andover, Mass. “It is more important for people in the highest tax brackets, but it is important for everyone.”
This story is from the August 2021 edition of Kiplinger's Personal Finance.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.
Already a subscriber ? Sign In
This story is from the August 2021 edition of Kiplinger's Personal Finance.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.
Already a subscriber? Sign In
Your Vacation Home Could Provide Tax-free Income
If you plan to rent out your vacation home, it's important to understand how your proceeds will be taxed.
A SOLID YEAR FOR THE KIPLINGER 25
All but one of our favorite actively managed, no-load mutual funds gained ground as markets recovered.
IT'S NOT YOUR IMAGINATION: YOUR CEREAL BOX IS SHRINKING
To avoid raising prices, some manufacturers are reducing the size of common grocery items. Here’s how to fight back.
SHOULD YOU WORRY ABOUT BEING LAID OFF? IT DEPENDS ON YOUR INDUSTRY
Downsizing has hit certain sectors. But cutbacks may be slowing, and some companies are expanding.
How identity thieves are exploiting your trust
Con artists themselves are disguising as well-known brands to steal your money and personal information.
CUT THE COST OF YOUR WIRELESS BILL
AT&T, T-Mobile and Verizon dominate the market, but smaller outfits offer similar network coverage at lower prices.
MAKING HOME ENERGY MORE AFFORDABLE
Households in need can get energy-efficiency upgrades, help with utility bills and more from this nonprofit.
A HEAD START FOR SAVERS
The Saver's Credit is designed to help low- and middleincome taxpayers contribute to a retirement account.
Say I Love You With a Money Date
To nurture a lasting bond with your partner, meet regularly to talk about money.
Plan for Your Own Elder Care
AFTER I wrote a series of columns in 2022 about elder care planning for family members, I received a number of responses like this one: “What about married couples who have no children or whose family members don’t live nearby?” wrote one reader. “Or a single individual with no close relatives? How should these people plan for their own elder care?”